- Silver continued scaling higher through the first half of the European session on Tuesday.
- The technical set-up favours bullish traders and supports prospects for additional gains.
- A sustained break below the $26.00 mark is needed to negate the constructive outlook.
Silver built on its recent strong rebound from the vicinity of mid-$25.00s, or two-and-half-month lows and gained some follow-through traction on Tuesday. The momentum pushed the commodity to near three-week tops, around the $26.70 region during the first half of the European session.
From a technical perspective, the post-NFP sustained move beyond the $26.30 supply zone, or the 50% Fibonacci level of the $23.78-$28.75 move up was seen as a key trigger for bullish traders. This also seemed to have set the stage for an extension of the ongoing upward trajectory.
The constructive outlook is reinforced by the fact that technical indicators on the daily chart have fully recovered from the bearish territory. Hence, a subsequent move beyond the 38.2% Fibo. level, around the $26.85 region, looks a distinct possibility amid a softer US dollar.
This mentioned hurdle is closely followed by the $27.00 mark. Some follow-through buying might trigger a fresh bout of the short-covering and has the potential to lift the XAG/SUD further towards mid-$27.00s. The latter coincides with the 23.6% Fibo. level and might cap the upside.
On the flip side, the $26.30 resistance breakpoint (50% Fibo. level) now becomes immediate support to defend ahead of the $26.00 mark. A convincing break below will shift the near-term bias back in favour of bearish traders and turn the XAG/USD vulnerable to break below the $25.70 confluence.
The said region comprises the very important 200-day SMA and the 61.8% Fibonacci level of the $23.78-$28.75 move up. Some follow-through selling below mid-$25.00s will reaffirm the bearish break and drag the XAG/USD back towards challenging the key $25.00 psychological mark.
Silver daily chart
-637611642299025518.png)